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SIGNATURE STAN PITTMAN
TITLE SECRETARY
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<S> <C>
<ARTICLE> 6
<LEGEND>
(Replace this text with the legend)
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<CIK> 0000742094
<NAME> REDWOOD MICROCAP FUND, INC.
<SERIES>
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<NAME> REDWOOD MICROCAP FUND, INC.
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<CURRENCY> U.S. Dollars
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<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> APR-01-1998
<PERIOD-END> SEP-30-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 3086935
<INVESTMENTS-AT-VALUE> 4337228
<RECEIVABLES> 7828
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lEGAL PROCEEDINGS EX-99
The Securities and Exchange Commission ("SEC") filed an administrative action
against the Fund's President because of certain trading activity in his personal
accounts during 1994. A hearing was held in November 1998 during which the
Fund's President vigorously defended his position before a SEC Administrative
Law Judge. The Judge's decision is not expected until late 1999 or 2000.
Management does not believe an unfavorable outcome of this action will
materially affect the Fund or management of the Fund; however, it is uncertain
to what extent an unfavorable outcome would affect the Fund.
